Health
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Federal Government Cuts to Promised Funding

In 2012-13, the Federal Government first cut $107 million in hospital funding and then returned it. The delay in returning funding created significant disruption to Victorian patients and hospitals. From 1 July 2013, the Federal contribution to Victorian hospitals and health services will be $99.5 million less next year than promised and over the next three years that figure will blow out to over $368 million.

The Facts

Flawed Federal Treasury calculation caused reduced funding

The Federal Government’s decision to reduce payments to Victorian hospitals in 2012-13 was set out in the Federal Government’s 2012-13 Mid-Year Economic and Fiscal Outlook (MYEFO) released on 22 October 2012.

The funding reduction by the Federal Government was based on its incorrect use of population "growth" statistics. The Federal Government based its cut in health funding for Victoria on the incorrect assumption that in 2011 Victoria’s population fell by 11,111 people.

The Australian Bureau of Statistics has published figures which show that Victoria’s population grew by 75,400 people in 2011. Further, on 20 June 2013 the latest Australian Bureau of Statistics showed Victoria's population grew by 100,000 people in 2012 - the highest of any state.

The Commonwealth decision to reduce promised funding was criticised and unanimously rejected by state Health Ministers and by the 2013 Senate Finance and Public Administration Committee Inquiry findings into "Implementation of the National Health Reform Agreement".

Read more about the Federal Government’s incorrect use of population "growth" statistics.

Evidence of reduced Federal funding

On 1 November 2012, Federal Treasury sent the states the following table highlighting how the Federal cut in national health funding amounting to $403.48 million would impact each state and territory in the 2012-13 financial year. The Federal Government outlined it would make the cuts by reducing payments in the National Health Funding Pool.

Table from Federal Treasury indicating funding reduction
  NSW Vic Qld WA SA Tas ACT NT Total
2011-12 determination ($ million) 48.90 39.71 40.15 6.34 10.96 1.95 0.60 1.05 149.67
2012-13 MYEFO ($ million) 89.86 67.09 63.28 5.95 20.01 4.15 1.24 2.21 253.81
Total ($ million) 138.76 106.80 103.43 12.29 30.97 6.10 1.84 3.26 403.48

The Administrator of the National Health Funding Pool and the Acting CEO of the National Health Funding Pool subsequently contacted the Secretary of the Victorian Department of Health to confirm details of the reductions in payments from the Federal Government into the National Health Funding Pool.

Victoria was advised on 3 December 2012 that the reduction for the remainder of 2012-13 would amount to $107,304,039.34, and would be spread over each of the next seven monthly payments - a $15.3 million reduction each month.

Victoria has received evidence from the Reserve Bank of Australia that Federal funding into the Pool has reduced in both December 2012 and January 2013.

Timeline of events

20 October 2012 Health Specific Purpose Payment 2011-12 Determination made by the Federal Treasurer but withheld from the states until November 2012.
22 October 2012 Federal Government announced the funding cut of $107 million from Victorian Hospitals in their 2012-13 Mid-Year Economic Fiscal Outlook.
9 November 2012 Standing Council of Health (SCoH) Ministers meeting: the Commonwealth decision to reduce promised funding was criticised and unanimously rejected by state Health Ministers.
6 December 2012 The Administrator of the National Health Funding Pool confirmed to the department that the precise Federal Government payments to Victorian hospitals would change from $278.41 million in November 2012 to $263.08 million in December 2012 a reduction of $15.3 million.
December 2012 - February 2013 The Victorian Health Minister met with 84 Victorian Health Services Boards and key stakeholder groups.
7 February 2013 Senate referred the matter to Senate Finance and Public Administration Reference Committee.
21 February 2013 Federal Government announced that $107 million would be repaid directly to the Victorian Local Hospital Networks.
22 February 2013 Senate Finance and Public Administration Reference Committee hearing into the Implementation ofthe National Health Reform Agreement.
7 March 2013 Final Report on Senate Finance and Public Administration Reference Committee Inquiry into Implementation of the National Health Reform Agreement released, supporting Victoria's stance seeking return of $107 million in health funding.
3 April 2013 First return payment made to a Victorian Health Service.

Significant disruption to Victorian patients and hospitals

The five month delay in returning funding created significant disruption to Victorian patients and hospitals:

From 1 July 2013, further Federal cuts to promised funding will remove over $368 million over three years

From 1 July 2013, the Federal contribution to Victorian hospitals and health services will be $99.5 million less next year than promised and over the next three years that figure will blowout to over $368 million.

Commonwealth cuts to promised Victorian hospitals and health services funding
Commonwealth cuts to promised funding announced in the 2012-13 Mid-Year Economic and Fiscal Outlook

  Commonwealth cut to promised funding Nominal Distribution - $'000s
Health Service 2013/14 2014/15 2015/16 3 year total
ALBURY WODONGA HEALTH -1005 -1226 -1481 -3713
ALFRED HEALTH -7185 -8766 -10584 -26536
AUSTIN HEALTH -6185 -7546 -9111 -22842
BAIRNSDALE REGIONAL HEALTH SERVICES -582 -710 -858 -2151
BALLARAT HEALTH SERVICES -2600 -3172 -3829 -9601
BARWON HEALTH -4484 -5471 -6606 -16561
BASS COAST REGIONAL HEALTH -340 -415 -501 -1257
BENALLA & DISTRICT MEMORIAL HOSPITAL -184 -224 -271 -678
BENDIGO HEALTH CARE GROUP -2693 -3286 -3968 -9947
CASTLEMAINE HEALTH -221 -270 -326 -817
CENTRAL GIPPSLAND HEALTH SERVICE -586 -715 -864 -2165
COLAC AREA HEALTH -232 -282 -341 -855
DJERRIWARRH HEALTH SERVICES -351 -428 -517 -1296
EAST GRAMPIANS HEALTH SERVICE -164 -200 -241 -604
EASTERN HEALTH -7689 -9381 -11326 -28396
ECHUCA REGIONAL HEALTH -371 -452 -546 -1369
GIPPSLAND SOUTHERN HEALTH SERVICE -167 -204 -246 -618
GOULBURN VALLEY HEALTH -1701 -2075 -2506 -6282
KYABRAM & DISTRICT HEALTH SERVICES -133 -163 -196 -492
LATROBE REGIONAL HOSPITAL -2015 -2458 -2968 -7442
MARYBOROUGH DISTRICT HEALTH SERVICE -157 -192 -232 -582
MELBOURNE HEALTH -7680 -9369 -11313 -28362
MERCY PUBLIC HOSPITALS INCORPORATED -2749 -3354 -4049 -10151
MTAA SUPERANNUATION FUND MILDURA BASE HOSPITAL FACILITIES AND SERVICES PTY LTD -1059 -1291 -1559 -3909
NORTHEAST HEALTH WANGARATTA -1011 -1233 -1489 -3733
NORTHERN HEALTH -3661 -4467 -5393 -13522
PENINSULA HEALTH CARE NETWORK -4471 -5455 -6586 -16512
PETER MACCALLUM CANCER INSTITUTE -1166 -1423 -1718 -4306
PORTLAND DISTRICT HEALTH -234 -285 -344 -864
ROYAL CHILDREN'S HOSPITAL -3306 -4033 -4870 -12209
ROYAL VICTORIAN EYE & EAR HOSPITAL -900 -1098 -1326 -3323
ROYAL WOMEN'S HOSPITAL -1873 -2285 -2759 -6918
SOUTH WEST HEALTHCARE -1296 -1581 -1909 -4786
MONASH HEALTH -12412 -15144 -18285 -45841
ST VINCENT'S HOSPITAL MELBOURNE LIMITED -4677 -5706 -6890 -17273
STAWELL REGIONAL HEALTH -153 -186 -225 -564
SWAN HILL DISTRICT HEALTH -344 -420 -507 -1270
WEST GIPPSLAND HEALTH CARE GROUP -616 -752 -908 -2277
WESTERN DISTRICT HEALTH SERVICE -395 -483 -583 -1461
WESTERN HEALTH -6020 -7345 -8868 -22233
WIMMERA HEALTH CARE GROUP -547 -667 -806 -2020
ALEXANDRA DISTRICT HOSPITAL -70 -85 -103 -257
ALPINE HEALTH -133 -162 -195 -489
BEAUFORT & SKIPTON HEALTH SERVICE -52 -63 -76 -191
BEECHWORTH HEALTH SERVICE -88 -107 -129 -324
BOORT DISTRICT HEALTH -27 -33 -40 -100
CALVARY -312 -381 -460 -1154
CASTERTON MEMORIAL HOSPITAL -46 -56 -67 -169
COBRAM DISTRICT HEALTH -72 -88 -106 -266
COHUNA DISTRICT HOSPITAL -61 -75 -91 -227
DUNMUNKLE HEALTH SERVICES -13 -16 -19 -47
EAST WIMMERA HEALTH SERVICE -122 -149 -180 -452
EDENHOPE AND DISTRICT MEMORIAL HOSPITAL -44 -53 -64 -162
HEATHCOTE HEALTH -25 -31 -37 -94
HEPBURN HEALTH SERVICE -98 -120 -144 -362
HESSE RURAL HEALTH SERVICE -24 -29 -35 -88
HEYWOOD RURAL HEALTH -29 -35 -43 -107
INGLEWOOD AND DISTRICTS HEALTH SERVICE -22 -27 -33 -83
KERANG & DISTRICT HEALTH -76 -93 -112 -281
KILMORE AND DISTRICT HOSPITAL -127 -155 -187 -470
KOOWEERUP REGIONAL HEALTH SERVICES -61 -75 -90 -226
KYNETON DISTRICT HEALTH SERVICE -107 -131 -158 -395
LORNE COMMUNITY HOSPITAL -28 -34 -41 -104
MALDON HOSPITAL -14 -17 -21 -53
MALLEE TRACK HEALTH AND COMMUNITY SERVICE -46 -56 -67 -168
MANSFIELD DISTRICT HOSPITAL. -74 -90 -109 -274
MOYNE HEALTH SERVICES -43 -53 -64 -160
NATHALIA DISTRICT HOSPITAL -25 -31 -38 -94
NUMURKAH DISTRICT HEALTH SERVICE -79 -97 -117 -293
OMEO DISTRICT HEALTH -20 -25 -30 -76
ORBOST REGIONAL HEALTH -74 -90 -109 -273
OTWAY HEALTH AND COMMUNITY SERVICES -31 -38 -46 -115
ROBINVALE DISTRICT HEALTH SERVICES -67 -82 -99 -247
ROCHESTER AND ELMORE DISTRICT HEALTH SERVICE -59 -72 -87 -217
RURAL NORTHWEST HEALTH -101 -124 -149 -374
SEYMOUR DISTRICT MEMORIAL HOSPITAL -145 -177 -214 -536
SOUTH GIPPSLAND HOSPITAL -61 -75 -90 -227
TALLANGATTA HEALTH SERVICE -47 -57 -69 -174
TERANG AND MORTLAKE HEALTH SERVICE -65 -79 -95 -238
TIMBOON AND DISTRICT HEALTHCARE SERVICE -45 -55 -66 -167
UPPER MURRAY HEALTH AND COMMUNITY SERVICES -45 -55 -67 -168
WEST WIMMERA HEALTH SERVICE -157 -191 -231 -578
YARRAM AND DISTRICT HEALTH SERVICE -62 -76 -92 -230
YARRAWONGA DISTRICT HEALTH SERVICE -92 -112 -135 -338
YEA AND DISTRICT MEMORIAL HOSPITAL -29 -35 -42 -106
VICTORIAN INSTITUTE OF FORENSIC MENTAL HEALTH -574 -701 -846 -2121
Public Health Adjustment -2,330 -3,030 -3,840 -9,200
Total -$99,540 -$121,630 -$147,040 -$368,210

Notes:

  • Albury Wodonga Health excludes the NSW funding contribution.
  • The Health Service allocation of the Commonwealth cut to promised funding has been nominally determined using a pro-rata allocation based on budgets published in the Policy and Funding Guidelines in July 2012 and refer only to services.


  Commonwealth cuts to promised Victorian hospitals and health services funding

The Victorian Government has increased acute health funding by 5.4 percent (2013/14 Budget)

In 2013/14 State Budget, the State Government has increased the acute health funding by 5.4 per cent bringing total State Government’s health funding to $14.3 billion over $2 billion more funding over the last three Budgets.

Victoria has received evidence from the Reserve Bank of Australia that Federal funding into the Pool has reduced in both December 2012 and January 2013.